AWA, the Company that Did; Almost.
My first contact with AWA was in reading a thread on the SASS wire about American Western Arms being sued by Colt for violation of Trade Dress. After reading the information on the thread and reviewing the arguments from Colt, I posted that I felt Colt had a right to sue and that AWA had created a product intended to confuse the market. I predicted the lawyers would make money and the whole thing would go away by removing the rubber grips with the running horse, remove the Peacekeeper name, and removing the word “Colt” from the caliber information on the barrel. I was close in my prediction.
For those not familiar with the concept of Trade Dress, it is often confused with a suit over patent rights. A patent gives the holder exclusive rights to the product for a specific number of years. The patent rights on the Colt Peacemaker expired a long time ago, and there has recently been a strong market for reproductions of the Peacemaker, but nobody had come as visually close to Colts product as AWA.
Trade Dress is essentially Colt’s claim that the AWA product has been designed to confuse the public into buying the AWA product thinking they are purchasing the Colt. Trade Dress cases are based on appearance and attempts to closely copy the identifying marks of another product that is still in production.
Shortly after my posting about how Colt should win its suit against AWA, I received a personal note from Barry Globerman, President of American Western Arms. He informed me that I was essentially correct in my analysis and description and that he had already offered to make the changes to the AWA Peacekeeper, but that Colt had turned down his offer and wanted to take the case to court.
It was several months later that I became involved in publicly defending AWA’s delivery problems with their Lightning. AWA was coming under attack from many of their customers for failing to deliver on guns that had been bought with deposits and a forecast delivery date. AWA had passed the delivery date and customers were upset with what appeared to be an endless series of excuses, and the regular forecast of just three more weeks before shipment would begin.
It was in about December of 2002 that Barry and I finally spoke on the telephone. It turned out that we had similar educational backgrounds. We each had law degrees and graduate business degrees. Although we discussed business and legal concepts, I found myself listening to him a lot and absorbing what he was telling me. This was probably because I have traditionally been a listener, which has helped me in the business world.
Barry shared very little with me during those first calls, but he became more open as he realized I was not going to publicly post on the Internet whatever he told me. A confidential relationship slowly developed between two businesspeople. Barry was trying to build American Western Arms and I was trying to build a business consulting company. The friendship was such that Barry even called me at home one morning when he saw one of my posts that I was giving up cowboy action shooting. He called to talk me out of hanging up my guns.
We talked about the Colt lawsuit, we talked about guns, we talked about his frustrations in running AWA, and we talked about the Internet. I found Barry to be charming, interesting, and not really interested in other people’s opinions when they conflict with his own, or reminded him of a tactical mistake. Mostly I listened to him vent a little and move on to the next issue.
I supported AWA in the controversy of the late deliveries because I was able to read into his emotions all of the normal frustrations of a project manager. I had been a project manager and understood all too well the frustrations of getting other people to perform when not having direct control over them. I could tell that Barry was always stuck in the triangle between customers who wanted delivery, frustrations over parts not arriving on time with the correct dimensions, and the rising costs.
Barry never shared the details of running the business, but any experienced business owner and manager can extrapolate the facts from what was being said during any given discussion. His highs and lows over delivery schedules were genuine and typical of the management of a complex project.
I was pleased and excited when Barry asked me to test one of the first Lightnings to reach the production market. Mine was put together from some parts that had surface blemishes or scratches, and he shipped it to California for field-testing. Another Lightning was being tested in Florida.
I waited ten days to take possession of the Lightning and took it to the range for testing. I had no problems with the gun on its first outing, but that would change for the first cowboy action matches. I let other people shoot the gun and they had problems. I shot it for a month and had problems. The test gun went back to AWA for corrective action and was returned within a week. Another couple of matches were shot with the gun and I experienced more problems. I wrote about the problems and Barry never said anything about publishing what was happening with the gun.
We established the problem was with an ejector bar coming loose so I pinned it with a 4-40 setscrew and adjusted the bar to be tight. The ejector bar guides the cartridge into the correct position for chambering and is a critical component of the gun. The gun performed very well after tightening the ejector bar. Although it would occasionally fed a cartridge incorrectly, the problem is no more serious than any other gun. Additionally, I was using bullets I cast myself and reloads that were not exactly loaded to factory specification.
The testing continued and I let other people shoot the gun whenever possible. In fact, other people have shot the gun more than me during the time I have owned it. My testing did include shooting entire matches with .45 Colt cartridges filled with American Pioneer Powder to see if the gun could be shot in a blackpowder category. Many people claimed the AWA Lightning was too sensitive to shoot any blackpowder or substitute, but I had no problems shooting an entire match with APP powder.
One of the shooters to test my lightning was Southpaw, SASS #57, who also shoots an original Lightning that was rebuilt by Eldon Penner in Nevada. Southpaw wanted to use up some of old .45 Colt ammunition that was loaded with Goex Blackpowder. He had no problem shooting six stages with genuine blackpowder in the gun. He did the same thing the following month and loaned the gun to the Match Director, who shot it for two stages. That means the gun shot a total of eight stages using blackpowder and performed well without any problems or cleaning.
The test gun has been used for nearly a year without any significant problems. AWA, however, continued to have problems producing the guns in different calibers. They also had problems with people who failed to develop a feel for the gun before declaring the gun to have problems and wanting to ship it back. The Lightning handles differently than other rifles and it is helpful for the owner to practice with it and develop the right feel. I shot with one shooter who could not get two cartridges to feed without problems. I shot the gun and put ten rounds through it very quickly without any problems. I am not saying the gun did not have problems, but a little practice and adaptation might have made that shooter much happier.
AWA continued to have problems with the different models of Lightnings and I lost contact with Barry because mine was working fine an there was nothing to report. I continued to support the gun on the Internet forums, because AWA had learned to avoid posting where they would have their posts misinterpreted or taken out of context. The Lightning owners seemed to either love or hate their guns without many falling in between.
In the meantime, ASM was having continued quality problems and a decision was made to bring out a new series of Single Action Army revolvers known as the Ultimate 1873 revolvers. The new guns featured parts made by both Pietta and Mateba, but were finished and assembled in the United States. The Hobby Gunsmith had the pleasure of testing one of these 1873 Ultimate revolvers last April and found it to be the best single action revolver we have had the pleasure of testing. This well built gun has a lot of promise. It should be noted that AWA removed the rubber grips with the running horse, cast off the Peacekeeper name. They continued to stamp .45 Colt Caliber on the side of the barrel, however.
AWA had different problems with each caliber of Lightning they released. The company was working to correct problems with the .45 caliber gun and experienced a new set of problems with the .38 caliber guns it was releasing. Customers were complaining about the magazine spring tension, the difficulty in loading the guns, and the tendency to either not chamber the round or to throw extra rounds onto the ground when the gun was cycled. Guns were being returned to AWA and customers were voicing their frustration on the Internet forums.
The aggressiveness of the complaining customers on the Internet forums would have the viewers believe that every AWA Lightning was being returned to the factory for repairs. AWA officially stated the number was about ten percent. Other reliable sources within AWA placed the return rate at closer to 35-50 percent. The company was bending over backwards to help many customers, which would come back to haunt them.
In an attempt to silence growing concerns about the quality of the Lightning rifle, AWA offered free wood upgrades to some customers and repaired guns that had been damaged by unqualified gunsmiths who had attempted to work on the Lightning. Some of the people who received something extra for their trouble posted about the upgrades on the Internet forums, which was an incentive for many people to demand free wood upgrades, free action jobs, and free repairs for damage not normally covered under a warranty. According to Barry Globerman, these extras were quickly draining the resources of this very small company.
February 2004 brought serious problems for AWA. Taurus announced at the Shot Show that it would be releasing their Thunderbolt, which looks like a reproduction of the Lightning and will retail for $450. The posts on the Internet forums suggested that people would hold off buying the AWA Lightning rifles with their problems and would wait for the inexpensive Taurus models. This was shortly followed by the Saturday morning publication of an incorrect report that AWA had filed for bankruptcy on the day before.
The Taurus announcement came at a bad time and Barry reports that it resulted in the cancellation of the orders for about 3,000 Lightning rifles by two of the major firearms distributors. Barry now feels the cancellation of the orders was caused by the announcement of the Taurus Thunderbolt, and that bankruptcy report was simply a case of very bad timing.
I had the occasion to speak with Barry about the day before the publication of the bankruptcy rumor. Everything seemed to be fine and he was excited about getting Green Mountain to make the octagon barrels for the Lightning. I spoke with him the Monday morning following the rumor of bankruptcy and Barry was passionately upset about all of the calls from people canceling their orders and the problem it was creating in getting the barrels ordered with Green Mountain. He stated that morning that the rumor of bankruptcy had resulted in changes to their trade credit, which had changed the cash picture of the company.
In retrospect, Barry feels he only lost orders for about ten of the Lightnings as a result of the bankruptcy rumor, but the distraction came at a time that magnified the impact of the rumor. The uncertainty of the octagon barrel orders that were being cancelled, coupled with credit problems Barry attributed at the time to the rumor, probably only prevented the buyers of octagon Lightnings from ever receiving their guns. Barry reports that Green Mountain finally made the barrels, but not until AWA had gone out of business.
AWA’s problems also began to mount with the suit by Colt. The company’s insurance company was reaching the end of their coverage and sought a Declaratory Judgment. AWA would have to sue its own insurance company to avoid the judgment and they chose not to take that route just to continue fighting Colt. Barry reports that the judgment required them to do the things he had originally offered Colt in an attempt to settle the suit in the beginning.
With all of the problems with the Lightning, the Declaratory Judgment in the Colt suit, and the mounting customer dissatisfaction problems, Barry says the Board of Directors concluded that they could not recover their losses and that the company should be dissolved. AWA closed their doors and reached an undisclosed agreement with gunsmith Russel Simpson, who will continue to sell the guns as a custom gunsmith.
So why did AWA fail? The following are my opinions formed from my observations and from conversations with people associated with AWA over the years. These kinds of predictions are easy in retrospect, but difficult to do while in the midst of running a business. A businessperson can only control three attributes of a product: cost, performance, or quality. Pick any two at the expense of the third.
To begin with, AWA tried to tackle a project that was too vast and complicated for a company their size. They did a good job in putting together the Ultimate 1873, but the Ultimate is not as complex a gun as the Lightning. I believe they would have been better off if they originally focused on the smaller Ultimate project and then tackled the Lightning after the Ultimate was a success.
AWA wanted to be first to market with a pump action rifle for Cowboy Action Shooting. In the haste to get the product to market ahead of the competitors, they had to negotiate with Italian companies while bringing together the talent needed to design the gun. The designer of the gun was Eldon Penner, a Colt Lightning specialist and gunsmith living in Nevada. Eldon built the two prototypes for demonstration by AWA. He also built the first .45 Lightning, which was the prototype for the AWA product.
It appears that marketing information was secured by allowing people to buy a special Limited Edition Lightning with a deposit. The deposit assured the sales numbers would be accurate and could be used to secure financing from the partners to produce the guns. It also appears that some of the specialists provided services to AWA in exchange for royalty payments on the guns that would be sold. This is not an unusual method of developing a new and speculative product as it keeps the development costs down while providing payment for those who helped with the success of the product. If the product is a success, then everyone wins. If the product fails, then everyone looses together.
The acceptance of deposits created a situation where customers had delivery expectations and they became concerned when the product was not delivered on time. These customers put a lot of pressure on the company to meet their delivery schedule after those schedules had slipped. This put a lot of pressure on AWA to deliver as soon as possible in order to prevent a greater public relations disaster.
The next issue was that they had problems managing their supply chain. A series of problems on the manufacturing side delayed the delivery of parts. There have also been suggestions that confusion came from differences of opinion between the people in Florida and the designer in Nevada. The net effect is that first parts delivered for the Lightnings may have not been optimal and required a lot of hand fitting to make them work. Insiders suggest that newly designed parts could have been manufactured in a second production run, but that that delivery and financial pressures forced the company to use parts that had to be fitted to work.
AWA overestimated the size of the Cowboy Action Market that they chose to enter. Releasing the gun in .45 Colt and smaller loads was a good decision for the CAS market, but the calibers are too small for marketing to hunters. Barry admits in hindsight that bringing out the gun with a medium frame for CAS was a questionable decision. He wishes he had brought out the Lightning with a large frame that could have been sold to the much larger market of game hunters. Such a market would not have had the time pressures to be first to market with a competitive pump action firearm.
AWA was affected by new business dynamics in the area of Internet marketing, which led to a bimodal opinion of AWA. The Internet has created an unusual business opportunity where many customers are in contact with each other and can quickly compare notes about a common interest. Information about the AWA lawsuit was posted on an Internet forum as mentioned earlier in this article. A variety of opinions were expressed about the topic, but AWA remained silent until frustration guided them to respond. Their response reflected the frustration of reading the plethora of negative messages.
A similar situation occurred when critics of the Lightning release time delays began making jokes about a continuing series of AWA statements that shipment of Lightning rifles would be in three more weeks. Frustration was evident in some of AWA’s responses, which appeared to be accurate, but less than constructive in the eyes of many of AWA’s customers.
AWA learned its lesson and withdrew from any other Internet communications. This put much of the image of AWA into the hands of people who posted their opinions on the Internet and out of the hands of AWA. Regardless of the accuracy of any information AWA staff may have posted, the frustrated delivery of the message was read by many of their customers. A better approach would have been to use their own Internet web site to publicly publish information about the production problems. This would have allowed AWA have a single and controlled distribution of information to their customers.
AWA never developed the status needed to be a reputable player in the firearms business. The company had been through several owners in too short a period of time to develop credibility as a quality gun provider. The strategy of the latest ownership group was to build top-quality firearms for the CAS market, but their error in trying to bring out the Lightning with quality problems greatly diluted that strategy. Had the superbly built Ultimate been brought out as their first entry into making quality firearms, they would have developed a good reputation for quality. The ultimate arrived on the scene with top quality bluing, Doug Turnbull color case hardening that is breathtaking, or with very hansom nickel plating. The Lightning with its continuous delays and quality problems did not create the reputation they desired.
Regardless of what people think of AWA, they did bring the Lightning to market even though many of them were not quite right. As of this writing, the USFA and Navy Arms Lightning rifles do not exist as production firearms and it appears the price on the USFA has already begun to rise. Navy Arms has said nothing about the progress of their rumored Lightning program. Taurus, who announced the release of their Lightning look-alike, is not expecting to ship production models until early 2005. The Taurus gun is supposed to look like a Lightning on the outside, but have a different internal action.
Are the owners of AWA Lightning rifles stuck with an orphan that is relegated to the gun rack? The answer is clearly no. These guns are fundamentally well built, but may just need an action job to make them work properly. Gunsmith Eldon Penner in Nevada will work on any AWA Lightning that is giving problems, or will do an action job on any Lightning. He will do a standard tune-up on the gun at a reasonable price. The Hobby Gunsmith featured an article about Eldon in the October 2003 issue and we know that he has a CNC machine and can make most any part needed for the gun.
Stay tuned for a future article on the Lightning owned by The Hobby Gunsmith. We are sending our Lightning to Eldon Penner for his standard tune up. The Lightning used by The Hobby Gunsmith has not given any significant problems, but we would like to see the full potential of this gun realized. We will test the gun and report our findings so other owners of AWA Lightnings will have an avenue of repair or corrective work for their own guns.